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International 214 Holders that received a grant of authority from the FCC for a substantive (non pro forma) transaction, such as a transfer of control or an assignment, within the last three years may be eligible for an exemption and will want to examine the criteria for an exemption closely. International 214 Holders qualifying for the exemption will be able to file a considerably more streamlined response to the Information Collection requirement.

We remind International 214 Holders that before they can even begin to submit their responses, they must ensure that they have a current FRN (FCC Registration Number) associated in the International Communications Filing System, or ICFS, database with the specific international Section 214 authorization(s) for which responses are being submitted. Instructions for confirming this association are provided in both the Public Notice and the Handbook. Arranging new associations and/or correcting existing associations must be coordinated through FCC Staff. (The volume of requests for Staff assistance with the response process is likely to be high and parties should not delay in determining whether they will need such assistance and making the request.)

As discussed in our December 15, 2023, Advisory, we also remind parties needing to file responses that the One-Time Information Filing System appears potentially challenging in its logistical constraints. To minimize complications during the process, we recommend close review of the Public Notice and Handbook before submitting responses to the Information Collection.

The authors and other attorneys of Kelley Drye’s Communications Group are available to provide assistance to any International 214 Holders that have questions regarding their responses to the Information Collection.

Based on our initial review of these materials, it appears that the filing process may prove cumbersome, regardless of the simplicity or complexity of a carrier’s specific ownership information. In our earlier posts on this subject, we encouraged International 214 Holders to begin collecting not only their direct ownership details but, perhaps more importantly, all indirect ownership, control, and investment management information. Foremost among the potential logistical challenges is resolution of any FRN-related issues. We emphasized that all International 214 Holders must respond to the Information Collection and that each must have an FRN in the FCC’s CORES system; however, the OIA’s instructions clarify that the FRN must also be associated in ICFS with the specific international Section 214 authorization(s) for which responses are being submitted. This association should be checked specifically by each responding International 214 Holder. Instructions for confirming this association are provided in both the Public Notice and the Handbook. Arranging new associations and/or correcting existing associations must be coordinated through FCC Staff, which may take some time if the level of requests is high, which might be the case because many Section 214 authorizations likely were issued many years ago.

In addition, use of the Filing System presents a number of somewhat cumbersome logistical aspects – e.g., users cannot go back through the program to correct responses on earlier screens. Instead, to effectively accomplish that, a special link must be requested by email from the Commission to view and modify the already completed screens. Responding International 214 Holders wishing to review their entire submission before certifying are advised to print (or screen-shot) each screen as they complete it because the total set of responses can only be printed after they are submitted. We find that various inadvertent keystrokes may cause the user to be “directed out of the form” and have to re-enter. Generally, users may reduce the risk of these technical “perils” by closely reading the instruction materials.

Every International 214 Holder is strongly recommended to closely review the Public Notice and Handbook before complying with the Information Collection, with particular attention to the discussion of the FRN-authorization association, and proceed to address any FRN association issues as soon as practicable.

We are providing an update to our May 2023 Frequently Asked Questions document regarding the Information Collection. The update reflects today’s Federal Register notice and the limited streamlining in the Supplemental Order.

A separate Public Notice is to be issued shortly by the FCC’s Office of International Affairs (“OIA”), reiterating the response deadline and providing further instructions, and a form, for response submissions. We will circulate and post a copy of the OIA Public Notice, when issued.

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• All regulatory fees are to be paid electronically through CORES.
• The FCC will not issue bills for the regulatory fees and it is the payer’s responsibility to pay the fees owed (regardless of the amount posted in the CORES system).
• Failure to meet the regulatory fee payment deadline will result in the assessment of late payment penalties, set by statute at 25%. The FCC does not ordinarily waive late payment penalties.

Please feel free to contact us if you have any questions about the FCC regulatory fee payment process.

In the same Order, the OIA adopted an exemption from the one-time information collection requirement the Commission adopted in April 2023, applicable to international Section 214 carriers, allowing certain affected carriers to respond on a streamlined basis. We will provide more details in a successive blog post, but briefly, the new Order provides that Section 214 carriers that filed certain types of applications within three years prior to the as-yet-to-be-determined deadline for the one-time information collection will be able to provide reportable foreign interest holder information on an aggregated basis rather than providing, as required of other international Section 214 holders, the identities, specific equity and voting interests, and descriptions of the controlling interests of reportable foreign interest holders. Finally, as noted in the Order, the information request will require additional review by the Office of Management and Budget prior to OIA’s announcement of the effective date and response deadline for the information collection, to be issued via publication in the Federal Register and as an FCC public notice at least thirty days before the applicable reporting deadline. We will keep you apprised.

For a more in-depth look at July USF news and updates on pending appeals and guidance requests before the FCC relating to USF contributions issues, click here to read and subscribe to our monthly USF Tracker.

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For a more in-depth look at May USF news and provide and updates on pending appeals and guidance requests before the FCC relating to USF contributions issues, click here to read and subscribe to our monthly USF Tracker.

This last fact perhaps explains why the Commission had not acted on a 2015 petition for reconsideration (and a related stay request) challenging the 2015 Forfeiture Policy Statement filed by several leading wireless and wireline carrier trade associations, which the MO&O now dismisses as moot. However, the Commission, in effect, affirmed the applicability of its existing “continuing violations” treatment of unpaid or underpaid USF contributions, other fund contributions (to the Telecommunications Relay Service (TRS) Fund, Local Number Portability (“LNP”), North American Numbering Plan (NANP), and FCC regulatory fees. By finding the challenges in the foregoing petition to the treatment of fund and regulatory fee “payment failures” as continuing violations are outside the scope of the 2015 Forfeiture Policy Statement and the MO&O’s decision, the Commission left that treatment in place – namely that fees unpaid by the deadlines set under the FCC’s rules and orders result in continuing violation until paid even if past the one-year statute of limitations that otherwise generally applies to enforcement actions. This same continuing violation treatment, which was developed between 2006 and 2015, applies currently to failures to timely report the revenues on which fund contributions and regulatory fee payments are based.

The FCC notes that, in the future, it could conclude in its discretion that a forfeiture greater than that which the treble damages approach in the 2015 Forfeiture Policy Statement would have yielded. The Commission did not elaborate the type of circumstances which would yield such a significant forfeiture. Such cases are likely to be the exception rather than the rule. Keep in mind also that the statutory maximum’s for different types of forfeitures (depending on the nature of the enforcement subject) still apply.

While the issuance of the MO&O technically is something of a non-event because the 2015 Forfeiture Policy Statement was never relied upon by the Commission, the FCC’s reiterated commitment, at least for now, to apply a continuing violation treatment – like the suggestion that a specific enforcement adjudicated forfeiture could exceed a treble damages standard – is noteworthy. That commitment underscores the importance of accurate and complete reporting of assessable revenues on the FCC’s 499-A forms and prompt revisions in the event underpayments are found.

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On the prior episode, we discussed two items adopted by the FCC at the Open Meeting: one, the FCC’s proposed changes to the International Section 214 authorization regime applicable to providers of telecommunications services between the U.S. and other countries and, two, Commission proposals relating to expanded accessibility and transparency in the Wireless Emergency Alert program.

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Accompanying the NPRM was an Order that mandates a one-time data request for ownership information to all holders of international Section 214 authority. See our FAQs document describing the Order. The response deadline is not yet known as the Office of Management and Budget must first complete a review of the Order’s information collection obligations. The response deadline will be at least thirty days after the OMB review is completed as announced in the Federal Register.

The NPRM sets out a lengthy list of possible rule changes that would address some long-standing concerns of the Commission regarding the Section 214 regulatory framework. For example, the current international Section 214 process lacks standardized post-grant follow-up or monitoring. A 2020 report from a subcommittee of the U.S. Senate Committee on Homeland Security and Government Affairs emphasized the urgency of implementing some method to reliably monitor changes to international Section 214 carriers’ foreign ownership. The concern around lack of monitoring was further elevated by FCC proceedings in the past few years revoking the Section 214 authority of several carriers deemed to be agents of the Chinese government. As the Commission looks to collaborate more closely with Executive Branch agencies (i.e., the Committee for the Assessment of Foreign Participation in the United States Telecommunications Sector, commonly known as the Committee or Team Telecom) in addressing concerns of national security (as well as law enforcement, foreign policy and/or trade policy), the FCC appears to have come to the recognition that advancing these objectives is not served by a set-it-and-forget-it exercise triggered only by new applications or requests for approval when there are substantive changes in ownership and control.

Overview of the NPRM:

The NPRM is quite extensive and this article addresses only some of the principal highlights. Because of the broad range of proposals, this proceeding merits the attention of international Section 214 authorization holders.

1. Potential Section 214 Authorization Renewals:

Currently, there is no renewal requirement for international Section 214 holders of any kind. The FCC proposes to adopt a 10-year renewal requirement for all international section 214 authorization holders (but is open to comment on other renewal timeframes). The NPRM asks, if a renewal obligation is adopted, whether the time for renewal should be reset if the carrier undergoes a separate full FCC review prior to renewal, for example, in connection with a transactional application. The FCC seeks comment on what standards would apply to its review of a renewal application, what actions it could take in response to a renewal application (and would those differ depending on whether the underlying authorization was issued prior to the adoption of the new rules), and proposes that a carrier’s failure to file by the renewal deadline would result in automatic expiration of the authorization.

In connection with a prospective renewal requirement, the FCC further proposes to prioritize its focus on:

• carriers with foreign ownership as being of the greatest concern for the FCC and the security agencies,
• the length of time since the last substantive review of the authorization (i.e., initial grant, modification, assignment, or transfer of control),
• whether the authorization is subject to a mitigation agreement (noting that older mitigation agreements tended to be more general in their particulars and less facilitative of effective Team Telecom verification).
• carriers with no reportable foreign ownership, but whose authorizations raise other issues of concern for the FCC and the Executive Branch agencies.

The NPRM proposes streamlined processing for renewal applications where carriers have no foreign ownership. The FCC also seeks comment whether, in a renewal context, there are circumstances where it should rely upon prior national security determinations (by Team Telecom, presumably) to streamline review.

As with initial Section 214 applications with at least one 10% or greater direct or indirect foreign interest holder, the FCC proposes to routinely refer to Team Telecom any renewal application of an international carrier with reportable foreign ownership and those without foreign ownership that, in the FCC’s estimation, nonetheless raise other national security, law enforcement, or policy concerns.

As anyone familiar with the Team Telecom review process knows all too well, it is a protracted affair. Even with the institution of timelines for the completion of review, when a review actually begins (and the calendar starts running) is an uncertain matter. The NPRM proposes that a properly and timely filed renewal application will confer provisional continuing authority until the application is resolved which, if adopted, would ensure no gap in authority if the renewal review extends beyond the expiration date of the authorization subject to renewal.

While the NPRM focuses almost exclusively on international Section 214 authority, the Commission solicits comment on what effect, if any, the denial or revocation of a carrier’s international section 214 authority should have upon its domestic Section 214 authority.

2. Alternative Periodic Reviews:

The FCC seeks comment whether, rather than relying on a periodic renewal framework, it should instead adopt a putatively lighter-touch review framework, requiring carriers, say on an every-three-year basis, to submit much of the same information as would be required for a renewal application and with the same prioritization for review as proposed for the renewal protocol. The NPRM seeks comment on what actions the Commission could take after such a review. For example, what standards would apply to such a review and could the FCC revoke an authorization under certain circumstances upon completing the review, or would it have to specifically start a revocation proceeding?

3. Expansion of the Information Required in Section 214 Applications:

The FCC seeks comment on a number of proposed changes in the information that applicants for international Section 214 authority must submit with their applications, whether for initial authority, transaction approvals, or, if adopted, with renewal applications. (Note that the FCC adopted requirements in the 2020 Executive Branch Process Reform Order and the 2021 Standard Questions Order imposing on applicants for international section 214 authorizations or for FCC consent to transfers or assignments the requirement to include with their applications responses to standard Team Telecom questions. Some of the adopted rules from those Orders, including those related to this informational obligation, are not yet in effect.) These include new rules that would require applicants to:

• Disclose 5% or greater direct and indirect equity and/or voting interests, a change which would align with the threshold applied by Team Telecom when it conducts reviews of FCC applications referred to it; currently, the threshold for disclosure is a 10% direct or indirect ownership interest. In that regard, the NPRM seeks comment on whether certain qualifying ownership interest management agreements should be disclosed, whether disclosure of certain interests from 5% to <10% should be treated as “presumptively confidential,” and whether the obligation to disclose interests below 10% should be limited to foreign interest holders or simply holders associated with foreign adversary countries (as defined by the Department of Commerce regulations – that is China (including Hong Kong), Cuba, Iran, North Korea, Russia and the Maduro Regime).
  
  It is also worth noting that the Commission inquires whether, if it adopts a 5% threshold for reporting foreign ownership in international Section 214 applications it should extend that requirement to submarine cable landing license applications. (We should mention that, otherwise, the NPRM does not expressly propose any changes to the submarine cable landing license regulatory framework, which is involved in many transactions involving international carriers when they are also subsea cable system operators. Like international Section 214 authorizations, submarine cable system authorizations are administered by the newly-minted Office of International Affairs.)

• Provide, routinely, certain categories of information, so-called “specific information,” which FCC staff often requests on an ad hoc basis when reviewing Section 214 applications before putting them on public notice. This “specific information” might include details of the applicant’s current and future services, markets, customers, and provisioning (owned facilities, IRUs, leasehold interests or resale).
• Identify foreign-owned or -controlled Managed Network Service Providers (“MNSPs”) they use, including applicants without reportable foreign ownership. The NPRM is also considering whether to refer any application to Team Telecom, even if the carrier does not or will not have disclosable foreign ownership interest, if it uses and/or will use foreign-owned MNSPs.
• Provide detailed information regarding cross-border facilities an authorization holder uses or will use to provide Section 214 services between the United States and either Canada or Mexico (including address and coordinates for the facilities, owner information for each facility, and identification of the equipment to be used, among other data points). Indeed, the NPRM suggests the Commission may, in a future order, conduct a one-time information collection concerning cross border facilities. The proposed cross-border facility information rules would apply to both facilities-based and resale carriers, with correspondingly different requirements.
• Certify as to commitments and practices for cybersecurity, whether the carrier uses equipment or services included in the Commission’s “Covered List” of equipment and services made or provided by objectionable entities (such as Huawei) established in connection with the Secure and Trusted Communications Networks Act, and as to compliance with FCC rules/regulations, the Communications Act and “other laws.” The Commission also seeks comment on whether to impose a new obligation on international Section 214 applicants as a condition of grant that they will not purchase or use equipment or services obtained from entities on the Commission’s “Covered List.”

4. Ensuring the Currency of Information through Updates

The NPRM seeks comment whether, in the scenario where the FCC adopts the proposed periodic renewal requirement, it should impose an ongoing obligation on international Section 214 carriers requiring them to submit reports every three years (or some other period) following the grant of a renewal application, until the next grant of a renewal application, which would reset the three-year reporting requirement. The reports, depending on the scope of any such rule adopted, could include ownership information, cross border facilities information, service and geographic market information, details of their data storage facilities, the foreign locations where U.S. records are stored and from where their U.S. infrastructure is or can be accessed, controlled and/or owned; and the countries in which their employees, subsidiaries, and/or offices are currently located. The NPRM asks a variety of questions about the contents of any ongoing reporting requirement. The Commission also is considering whether to include certifications regarding cybersecurity standards, use of “Covered List” equipment or services, regulatory compliance, and other information.

We note that the NPRM also suggests imposition of a series of overlapping reporting requirements in the event that, for example, during a Section 214 “license period,” there is a grant of authority to transfer control of a Section 214 authorization. We expect comments on the NPRM will forcefully address any such additional (and arguably duplicative) requirements, and carriers will seek to streamline any new ongoing reporting requirements (or oppose them altogether).

5. Additional Management of International Section 214 Authorizations:

The Commission also seeks comment on a variety of other possible rule changes that could impact carriers’ regulatory compliance (in addition to other administrative revisions and conforming changes to Parts 1 and 63 of the Commission’s Rules), including whether to adopt

• a rule that would (with few exceptions) limit carriers to holding a single international section 214 authorization.
• a “use it or lose it” rule that requires new international section 214 authorization holders to commence offering service pursuant to the authority within one year following grant and provide the Commission with notice of the same. (This would be similar to other FCC licenses with deadlines to build-out and/or operate.) In the absence of notice of operations, or a good-cause waiver filing, the FCC proposes to cancel the authorization.
• a general presumption that the international Section 214 authority of carriers that fail to meet compliance filing requirements may be cancelled where, for example, there are no other signs that the carrier is still operating. The NPRM proposes that a public notice would be released regarding the proposed cancellation, allowing thirty days for the holder to respond.
• a revised international services discontinuance Rule such that any authorization holder that permanently discontinues service provided pursuant to their international section 214 authority must notify the Commission and affirmatively surrender the authorization. In connection with this possible rule change, the NPRM seeks comment on whether to define permanent discontinuance of service as occurring following a period of three consecutive months during which the authorization holder does not provide any service under its international section 214 authority.

The NPRM will be established upon Federal Register publication, with comments due thirty days after publication and replies due sixty days after publication. These dates are not yet set. We expect, given the far reaching potential implications of the rule proposals that the NPRM will likely draw significant input from industry participants.

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Full Spectrum’s FCC Open Meeting Recaps feature a first take and analysis following the FCC’s monthly Open Meetings, with an emphasis on the agenda items directly impacting our clients.

Members of Kelley Drye’s Communications Group have prepared a document answering Frequently Asked Questions regarding the Order. If you have a question not addressed in this document, please do not hesitate to reach out to one of the attorneys of the Kelley Drye Communications Group.

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